Wednesday, January 28, 2015

1. Fail to execute will correctly.

The most important part of drafting a will is executing it correctly. Arkansas statutes prescribe an unforgiving method for bringing your will into legal existence. Get this wrong and your will at best is nothing more than a piece of paper and at worst a drag-out legal fight.

2. Fail to mention all children.

Arkansas adheres to the traditional pretermitted childrenrule, which essentially states that if any surviving children are not mentioned in the will, the surviving child will receive what they would have received if there had been no will—that is to say, under the law of intestacy.

In other words, suppose you die and are survived by your spouse and a five-year old boy. Your will directs all your property to go to your spouse, but makes no mention of your boy. In such a situation, subject to a few exceptions, your boy would basically inherit your whole estate—not your spouse. Arkansas law assumes that if you fail to mention a child in your will, you forgot to update your will after you had your child.

The nightmare scenario is the 27-year-old son whom you leave out of your will because he is a jerk and always has been. Your will could direct your estate worth millions to go to your wife, your elderly dad, your charity, and so on, but fail to specifically disinherit your punk son, and he will basically get everything.

This rule also applies to grandchildren, so it’s important to mention them as well.

3. Fail to dispose of all property.

No will should ever be executed without a “residue clause.” A residue clause disposes of all property that you fail to identify specifically in your will. Any property that is not disposed of in your will is governed by the law of intestacy—in other words, the Arkansas legislature determines where your property goes. Good luck with that.

4. Fail to deal with old wills.

A few months ago, I wrote about the problems of the Nelson Mandela estate. His biggest problem was his most recent will’s failure to properly deal with older wills. Some attorneys draft what are called codicils, which are simply updates to an existing will. For example, a codicil may simply say, “Paragraph 5 of my January 23, 2011 will is updated to read as follows . . .” Legally, this is fine, but it opens the door to numerous problems. My preference is to draft a clean will, destroy the old will, and include the line “this will invalidates all previous wills and codicils.” Do this and you’ll virtually never run into problems with old wills.

5. Fail to prioritize assets.

In the absence of guidance from your will, Arkansas statutes prescribe a priority of assets in the event your estate has to be liquidated to satisfy creditors’ claims. I bet you can already see how this is a potential problem. Suppose Johnny gets your 200-year-old piano, Suzy gets your Cadillac, and Barry gets your fishing boat. Which property should be sold in the event that property needs to be sold to pay off, for example, your remaining medical debts?

If the piano gets sold, Johnny could get nothing. If the Cadillac is sold, Suzy could get nothing. If the fishing boat is sold, Barry could get nothing. And because you didn’t hire a lawyer, Johnny, Suzy, and Barry will each be hiring a lawyer.

6. “Share and share alike”.

“I hereby give my entire estate, share and share alike, to my brothers, Tom Smith and Larry Smith.” Essentially, your intent is that your two siblings will each get half the estate. This is a very common provision and it sounds pretty innocuous. But this provision runs into a similar problem as #5 above. What about your highly desirable things that don’t divide in half? Who gets your Smith & Wesson? Who gets your vacation home? Who gets that stock you bought last year that has tripled in value? For crying out loud, who gets your adorable basset hound?

Tom may want one or the other of these properties sold, Larry may want one or the other intact. And, once again, because you skipped on calling a lawyer, Tom and Larry will each have to call theirs.

7. Lose your will.

This may sound silly, but losing a will is more common that you may think. In order to probate a lost will, Arkansas statutes require two witnesses who can clearly and distinctly testify to its provisions. However, under the statute, a copy of the original will counts as one witness. This is great, not only to satisfy the requirement of one of the two witnesses, but also to refresh the memory of the second witness.

When I help individuals execute their wills, my practice is to keep a copy in my file and on my dropbox. This provides extra protection in the event your will cannot be found, or is inadvertently destroyed.

These are but a few of the mistakes I’ve seen in executing wills. There are lots more, but most are preventable if you know what you’re looking for.